Housing Starts Strengthen In March, Soaring Past The One Million Annual Mark - April 16, 2013

The housing market is alive and well, as evidenced by the issuance earlier this morning of data showing that the nation's builders had started 1.036 million homes on an annualized basis in March.

That total was well above the consensus forecast of 934,000 starts, and was materially better than the upwardly revised 968,000 homes started on an annual basis the month before. Initially, the February total had been estimated at 917,000. The latest result, meanwhile, was dramatically ahead of the year-earlier total of just 706,000 starts.

On the other hand, building permits, a more forward-looking metric, eased back somewhat last month, totaling a still formidable annual rate of 902,000 homes. That total was 3.9% below the revised February tally of 939,000 permits, but was 17.3% ahead of the March, 2012 permit estimate of 769,000.

The March report was especially gratifying, coming as it does in the wake of a series of underwhelming economic reports, including issuances on manufacturing, non-manufacturing, retail sales, and employment growth. These latter numbers suggest that the first quarter, which likely saw economic growth rebound to near 3%, ended on a softer note. We also believe, notwithstanding the good housing numbers, that growth in the current three months will slow somewhat, with GDP perhaps struggling to rise by even 2%.

As to this report, it was a stellar one, with increases in the Midwest, the South, and the West. Only the Northeast, the smallest of the four regions, saw a contraction in building activity. Taken as a whole, this was the first month in which starts had exceeded the one-million unit level in several years. By comparison, as recently as last November, starts were at just 841,000. They were as low as 728,000 last July. Thus, it is apparent that this is a strong expansion. Now, we will need to see the data on new home sales later this month to ascertain whether these better building metrics over the past few months are translating into rising home sales--or higher unsold inventories.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.